US Supreme Court tariff ruling may trigger 'massive litigation'

The US Supreme Court's ruling against emergency tariffs has led to a new 10% uniform levy. Experts predict massive litigation and refund claims, with one calling it a 'horrible corner' for Trump that could trigger a US fiscal crisis.

The landmark 6-3 ruling by the US Supreme Court striking down emergency tariffs has sent ripples through the global trade community. While the ruling curtails executive power, the immediate introduction of a 10 per cent uniform levy under Section 122 has drawn sharp reactions from trade, legal, and economic experts.

Massive Litigation and Refund Claims Predicted

Shailesh Haribhakti, a renowned Chartered Accountant and Cost Accountant, expects "Massive litigation and refund claims". Haribhakti emphasises that the ruling creates a significant legal liability for the US government, as the differentiated tariffs previously collected may now be deemed illegal.

"The Supreme Court has ruled that the president had no ability and no power and that it had to be done through the Constitution of the United States through the houses to levy differential tariffs on different countries... as of today, what this does is that the earlier levied differential tariffs can become subject of massive litigation and people will start claiming refunds of the tariffs that they've already paid. The US will have to figure out exactly how to deal with this very difficult situation," he said.

Regarding the new 10% uniform tariff, Haribhakti notes that while it levels the playing field, the cost will ultimately fall on the American public. "In effect, what happens is that the people who are buying the goods which are imported will have to cough up the 10% levy that is charged... typically what happens is that a large proportion of such levy is pulled out from the consumer's pocket," he said.

A 'Horrible Corner' and Potential Fiscal Crisis

R N Bhaskar, CEO, Asiaconverge, says, "Trump is caught in a horrible corner". Bhaskar views the ruling as a potential catalyst for a US fiscal crisis, arguing that the US may not even have the liquidity to provide the refunds the court implies.

"The Supreme Court says don't pass on the price to the customers, which means that all the tariffs that have been levied... have to be refunded. America may not have the money to refund it. To prevent that crisis, [Trump] has taken shelter of this section [122] and has allowed the tariffs to continue for 150 days. Trump is caught in a horrible corner which is good for the world, bad for Trump,"he said.

Bhaskar also expressed deep scepticism regarding the "sealed" trade deal with India, suggesting the US is using its geopolitical weight as leverage. "My suspicion is that Trump knows that India will not back out from the deal because he's got blackmailing power over India... America says the deal with India is signed and sealed. India says no, but knowing how India has buckled in the past, it's quite possible that India will buckle again," he said.

A Shift to Rule-Based Trade

Agneshwar Sen, Trade Policy Leader, EY India, expects "A Shift from ad hoc diplomacy to rule-based trade". Sen provides a more technical perspective, noting that the ruling forces the US to find a "firmer statutory basis" for its trade actions, which could ultimately benefit Indian exporters by providing a more predictable environment.

"The Court has effectively removed the legal foundation for emergency-based reciprocal duties that were used as the negotiating baseline. For India, this will require a redrawing of the structure of the trade deal... This may slow the deal finalisation, but it will enhance legal certainty and reduce the risk of sudden executive tariff actions," he said.

Sen also believes the ruling effectively dismantles the use of "emergency" threats as a negotiating tool. "The SCOTUS ruling thus strengthens rule-based trade engagement over ad hoc tariff diplomacy. For Indian exporters, it will level the playing field and provide legal certainty that the trading environment will be anchored on firm legal grounds rather than on emergency executive measures," he said. (ANI)

(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.)